With the general provision included in the 2026 Appropriations Act (Item 291 PPPPP) for the proposed action to impact “any other provider rates” community ICF-IIDs are included.  These programs are funded in accordance with 12VAC20-90-10 #6 which states:

6. Reimbursement to Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IID) shall be retrospective on the basis of reasonable costs in accordance with Medicare principles of reimbursement. Nonstate facilities shall be limited to a ceiling based on the highest as filed rate paid to an ICF/IID institution in state fiscal year 2012 and annually adjusted thereafter with the application of the NF inflation factor, as set out in 12VAC30-90-41 B.

This is particularly troublesome for two reasons:

• These programs are, by design, small (with two exceptions for long standing legacy programs, they are 12 beds or fewer and many are 6 beds or fewer); 38 homes for 262 adults are managed by CSBs, 24 homes for 138 children and/or adults are managed by private providers.  Small settings are far more susceptible  to dramatic fluctuations in cost because the cost is distributed over a far smaller number of individuals.  A vacancy in even one bed for a portion of the year can make the program unsustainable if it is providing complex medical care.

• With the impending, planned closure of Hiram Davis Medical Center in Petersburg, that has become a needed resource for individuals with IID with complex medical needs; putting community resources that can care for this population at even greater risk of being unsustainable is not a good policy choice.

We feel strongly, that to ensure that the level of care and support can be maintained for an extremely compromised population, that the language of 12VAC20-90-10 #6 cited above should be modified to eliminate the reference to state fiscal year 2012.  That is not, however, the issue raised by this notice.

Community Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF/IIDs) should be explicitly excluded from the proposed elimination of inflation adjustments. Eliminating inflation adjustments would have a significant financial impact on these essential providers. Community ICF/IIDs operate in small, highly specialized settings that serve individuals with the most significant intellectual disabilities and complex medical needs. Unlike larger providers that may be able to absorb increasing costs across larger operations, community ICF/IIDs typically serve only four to twelve individuals. Fixed costs—including 24-hour nursing, direct support staffing, specialized clinical services, utilities, insurance, and regulatory compliance—continue to increase each year regardless of occupancy. Without regular inflationary adjustments, reimbursement will increasingly fail to reflect the actual cost of providing care, forcing providers to absorb growing operating losses.

The financial impact is compounded by the inherent vulnerability of these small programs. Across Virginia, Community Services Boards operate just 38 homes serving 262 individuals, while private providers operate 24 homes serving 138 children and adults. Because costs are distributed across so few residents, even a single vacancy or an individual with exceptionally complex medical needs can substantially affect a home's financial stability. Eliminating inflation adjustments would further widen the gap between reimbursement and actual costs, placing these providers at increased risk of financial distress and eventual closure.

The downstream consequences would extend far beyond provider budgets. Community ICF/IIDs deliver one of the highest levels of community-based care available for individuals whose medical and behavioral needs cannot safely be met in other residential settings. If reimbursement fails to keep pace with inflation and rising operating expenses, providers will face difficult decisions about limiting admissions, reducing capacity, or closing programs altogether. This would reduce access to essential services for some of Virginia's most medically fragile individuals while increasing reliance on more costly hospital, crisis, and institutional resources.

These concerns are particularly acute given the planned closure of Hiram Davis Medical Center, which has long served as a critical medical resource for individuals with intellectual and developmental disabilities with complex healthcare needs. As specialized medical resources become less available, maintaining a financially stable network of community ICF/IIDs becomes even more important. Reducing reimbursement growth through the elimination of inflation adjustments risks undermining this critical infrastructure at a time when demand for these specialized services is increasing.

Although reimbursement for community ICF/IIDs is governed by 12VAC30-90-10(6), which provides for retrospective reimbursement based on reasonable costs consistent with Medicare principles, these providers remain subject to reimbursement limitations that already constrain cost recovery. The elimination of inflation adjustments would further erode reimbursement over time, making it increasingly difficult for providers to recruit and retain qualified staff, maintain clinical expertise, and continue delivering the level of care required by this population.

For these reasons, community ICF/IIDs should be expressly excluded from this proposed policy. Eliminating automatic inflation adjustments for these providers would not generate efficiencies in service delivery; instead, it would steadily weaken the financial viability of a small but indispensable provider network, reduce access to highly specialized community-based care, and ultimately increase costs elsewhere in Virginia's Medicaid and healthcare systems.

I echo the concerns voiced in the previous comments. It is incredibly concerning that ICFs could possibly be excluded from receiving funds to help them keep pace with economic conditions while providing the best possible care to some of our most vulnerable citizens. Many individuals served in these programs have incredibly complex medical conditions, require around-the-clock staffing and nursing care, and are at high risk for a variety of illnesses and infections due to their compromised health status. The individuals are often unable to communicate with words, and it is essential that they be served by stable staff who get to know them well and can best help monitor their health conditions. As an organization that has operated ICFs for the past 15 years, it has been evident that as individuals age, they need more support. In some cases, this has led to an increase in direct support staff as well as more nursing services and specialty services, such as occupational therapy and physical therapy, to ensure that individuals are able to experience the best quality of life in the community. As we worked to create community capacity for people coming out of the institutions, it was the promise of ICF services being cost-based that allowed many providers to proceed with this model which, although costly, is proven effective in serving some of our most vulnerable citizens. To cap funding on this service as it is intended to be provided is akin to pulling the rug out from under the individuals who have been able to thrive in the community at a time when many did not think it was possible for them to live outside of the walls of an institution. Consider the DOJ Settlement Agreement and the strides that have been made due to the ability of the community to meet the needs of previously institutionalized individuals in the community. The ICF model is a big part of that. It would be unwise to make any decision that would jeopardize the Commonwealth's standing with the DOJ Settlement Agreement. Placing a cap on funding for these programs will undoubtedly lead to consequences such as the inability to staff the programs which places the healthcare of the individuals at risk. This already high-risk population should not be subjected to such a harsh decision. Please consider that these are life-saving services and although they are costly, they work, and people need them. Please do not destabilize a system that has worked well for those who need it the most.